TMI Blog2018 (6) TMI 925X X X X Extracts X X X X X X X X Extracts X X X X ..... t to effect a deeming fiction, that if any sum is received from the prospective buyer before grant of completion certificate would be construction of residential complex service. The said amendment is prospective in nature and would be effective only after 1.7.2010 - However, in the instant case, the completion certificate shows that the construction activity has been completed on 19.11.2008. The provision of service, which is the taxable event during the impugned period happened prior to 1.7.2010. Therefore, the said amendment cannot be pressed upon the assessee to demand service tax. Demand cannot sustain - appeal allowed - decided in favor of appellant. - ST/200/2010, ST/41166/2015 and ST/42468/2015 - Final Order Nos. 41649-41651/2018 - Dated:- 9-5-2018 - Ms. Sulekha Beevi C.S., Member (Judicial) and Shri Madhu Mohan Damodhar, Member (Technical) Shri V. Ravindran, Advocate for the Assessee Shri B. Balamurugan, AC (AR) for the Revenue ORDER Brief facts are that the assessee is a proprietary concern of which Shri R. Kumar is the proprietor and is mainly engaged in promotion of residential complex. The department was of the view that assessee is liable to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been completed on 19.11.2008, the amendment brought forth on 1.7.2010 which has only prospective application cannot be pressed upon the assessee to demand service tax. The department has alleged that the services would fall within the definition of construction of residential complex alleging that the assessee has received amounts from the prospective buyers by sale of undivided share in the property. Such allegation has been strongly denied by the assessee even in the reply to the show cause notice. The property always remained in the ownership of assessee till the construction was completed. This aspect is established from the fact that the permission for construction of the complex was granted by CMDA as well as Corporation of Chennai in the name of the assessee. He referred to the permission certificates dated 9.3.2007 and 23.3.2007. Thus, the activities of construction of flats having been completed prior to the amendment to Section 65(zzzh), the demand of service tax for the three months after 1.7.2010 is also not sustainable. He relied upon the decisions in the cases of Josh P John and Others Vs. Commissioner of Service Tax, Bangalore 2014 (9) TMI 597 and Jain Housing Vs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... common water supply or effluent treatment system, located within a premises and the layout of such premises is approved by an authority under any law for the time being in force, but does not include a complex which is constructed by a person directly engaging any other person for designing or planning of the layout, and the construction of such complex is intended for personal use as residence by such person. Explanation. - For the removal of doubts, it is hereby declared that for the purposes of this clause, - (a) personal use includes permitting the complex for use as residence by another person on rent or without consideration; (b) residential unit means a single house or a single apartment intended for use as a place of residence 7. The short issue for consideration is whether service tax is payable for the construction of residential complex service in respect of the dwelling units constructed by the assessee prior to 1.7.2010 i.e. before introduction of the Explanation to the Section 65(105)(zzzh) and thereafter. The assessee has relied upon various Board circular. As per Board Circular F.No. 332/35/2006-TRU dated 1.8.2006, the Board has categorically c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for small service providers upto an aggregate value of taxable services of ₹ 4 lakh provided in any financial year vide Notification No. 6/2005-Service Tax, dated 1-3-2005 is applicable for construction of complex‟ service also. Above clarification was superseded vide Board s Master Circular No. 96/7/2007-ST dated 23.8.2007 which is reproduced below:- Reference Code Issue Clarification 079.01/ 23-8-07 Whether service tax is liable under construction of complex service [section 65(105)(zzzh)] on builder, promoter, developer or any such person,- (a) who gets the complex built by engaging the services of a separate contractor, and (b) who builds the residential complex on his own by employing direct labour? (a) In a case where the builder, promoter, developer or any such person builds a residential complex, having more than 12 residential units, by engaging a contractor for construction of the said residential complex, the contractor in his capacity as a taxable service provider (to the builder/promoter/ developer/any s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the strong arguments raised by the ld. AR is that the assessee has sold the UDS to the prospective buyer and therefore is not the owner of the property. Though it is discussed in the order that the promoter / assessee has sold the USD in the land to a few prospective buyers, we do not find any document to substantiate the same. The permission certificate for construction of the complex as well as the completion certificate is issued in the name of the assessee. These documents therefore strongly indicate that the land belongs to assessee till the completion of construction. The assessee has strongly and consistently submitted that the land always belonged to him and that the construction having been done in his own land, would not attract the levy of service tax. As clarified in circular dated 29.1.2009, it is common practice that the promoter enters into an agreement to sell UDS of the property to the prospective buyers. Such agreement to sell does not transfer any interest in the property to the prospective buyer. The ownership and the possession still remains with the promoter. In such cases, as clarified by the circular, only after completion of construction and full payme ..... X X X X Extracts X X X X X X X X Extracts X X X X
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